Turkish Cookie Maker Hits Expansion Path With IPOs, Debt Deals
(Bloomberg) -- The world’s third-largest biscuit maker plans to refinance loans and sell shares in various businesses to strengthen hubs in the U.K. and Turkey and drive an expansion in the more than 120 markets in which it distributes.
Yildiz Holding AS, owned by Turkish billionaire Murat Ulker, will roll over more than $1 billion in loans belonging to its United Biscuits Holdings Plc and Ulker Biskuvi Sanayi AS units at lower rates, Chief Financial Officer Mustafa Tercan said in an interview in Istanbul.
London-based United Biscuits will get a five-year, 725-million pound ($930 million) unsecured loan next month from a group of mostly European banks, which will be used to refinance an existing seven-year, 671 million-pound loan. The loan for the maker of McVitie’s digestives, which Yildiz bought for $3.1 billion in 2014, will have a 575 million-pound main portion and two tranches of 75 million pounds, he said.
“The book-building is still continuing and we are seeing a good oversubscription,” Tercan said. “United Biscuits will both reduce its existing debt and also its cost with the refinancing.”
Ulker, Turkey’s biggest snacks producer, will also get a loan of as much as $400 million after the United Biscuits deal, which it will use to refinance three-year debt of $550 million that has dollar and euro tranches maturing in November, he said.
Yildiz, which also owns luxury Belgian chocolate brand Godiva Chocolatier Inc., is pushing an expansion abroad as the political fallout from a failed coup in July last year makes it harder for companies to operate. Shares in the company’s main Turkish unit plunged on separate occasions in November and December after a report in a pro-government newspaper that was understood to implicate Ulker in financing businesses connected to the coup.
Murat Ulker, the owner, took to Twitter at the time to try to reassure investors. He urged them not to heed the speculation. Later, as shares plunged again, he issued a statement to reject speculation that the company’s plan to establish a U.K.-based unit was a protective measure to get assets out of Turkey.
The company has said it sees “significant opportunities” for growth in the Middle East, North America, Africa and Asia even as it continues to invest in its operations at home.
The holding company will sell another 30 percent of Ulker to Pladis, its wholly owned unit being established in London that will act as an umbrella company and also house United Biscuits and its DeMet’s Candy Co. business, Tercan said. Pladis will eventually control 51 percent of Ulker through either partial sales or as a whole that will be done next year, he said.
“Our intention is to have an initial public offering of Pladis in London, maybe in 2019 or later,” Tercan said. Yildiz may also consider an IPO in Godiva at some point in the future, he said.
Ulker will probably reach the 4.55 billion liras ($1.3 billion) of sales forecast for this year, up from 4.36 billion liras in 2016, Tercan said, while the ratio of earnings before interest, tax, depreciation and amortization, or Ebitda, to sales will remain at 13 percent, he said. The stock has gained 30 percent on the Istanbul Stock Exchange this year, trailing the 41 percent gain on the benchmark index.
Istanbul-based Ulker, which started selling biscuits in 1944, is in talks to buy the Saudi Arabian unit of United Biscuits and McVitie’s sales rights in the Middle East and North Africa region. It will use proceeds from an earlier loan of $375 million that it secured in April to finance the acquisition, Tercan said.
“We are aiming to complete the acquisition by the end of this year,” he said, adding that Ulker’s expansion in Saudi Arabia will boost its sales and Ebitda “significantly.”
Yildiz also has plans to sell shares in an IPO in Sok Marketler Ticaret AS, a discount grocery chain in Turkey that’s seeking to add another 1,000 stores by the end of this year from the 4,000 it currently operates, Tercan said. It may reconsider an IPO in its packaging unit Polinas Plastik, after a previous application was rejected by the Borsa Istanbul last year, he said.
The unit will raise its sales to 8 billion liras this year from 6 billion liras a year ago with Ebitda rising to around 300 million liras from 118 million liras, he said. A Yildiz unit holds 50 percent in Sok, while 39 percent is owned by Gozde Girisim, its private-equity arm. Gozde will consider an exit from one investment by the end of the year, he said, without providing details.